Egyptian gas deal ‘holding up supply’ – Jordan Times

AN AMENDED natural gas deal between Cairo and Amman has yet to be fully enforced, leaving Jordan with a fraction of the gas supplies outlined in the new agreement, according to energy officials.

The lack of enforcement of the amended deal has prevented the full resumption of gas supplies to Jordan, which were disrupted by an attack on the Arab Gas Pipeline last month, according to Ministry of Energy Secretary General Farouq Hiyari.

Amended gas prices, which were reached between Cairo and the government of Marouf Bakhit in August, have yet to be applied and have contributed to the delay, he said.

The energy official declined to elaborate on the new natural gas prices, which brings to an end a favourable pricing structure dating back to 2004.

Recent reports in the Egyptian press quoted Egyptian Minister of Petrol Abdallah Ghorab as saying that the price of gas supplies is to increase up to 300 per cent from the below-market price of less than $2 per thousand cubic feet outlined in the previous 15-year agreement.

The amended agreement, which calls for supply levels to reach 150 million cubic feet daily this year and 220 million cubic feet by 2012, is expected to be signed by the end of the month.

It remains unclear whether the change in government in Amman would lead to a delay in the agreement’s ratification.

A Sinai explosion last month severed gas supplies to Jordan and Israel, marking the sixth act of sabotage on the Arab Gas Pipeline since February and forcing the Kingdom’s power stations onto their diesel and heavy oil reserves at a cost of some JD3 million per day.

Multiple cuts in gas supplies, which Jordan relies on for 88 per cent of its electricity generation needs, cost the Kingdom JD637 million in the first half of the year and are expected to push the national energy bill to record highs, well above JD4 billion.

The insecure supply has forced energy officials to explore alternatives to meet a five-year “gap” ahead of the development of local energy resources such as oil shale, wind and nuclear power.

The ministry is currently preparing a tender for the construction of an offshore liquid gas terminal in the Port of Aqaba by 2013, receiving initial interest from several international firms including Royal Dutch Shell, British Petroleum, GDF Suez and Lemont/General Electric.

The Kingdom currently imports 98 per cent of its energy needs at a cost of 23 per cent of the gross domestic product.